The instant case is an action to enjoin Defendants from: (1) refusing to deliver and return all IBT Local Union 918 ("Local 918") property in their possession, custody or control to Eugene P. Maney as Trustee of Local 918; (2) representing themselves as authorized officers and/or representatives of Local 918, unless so authorized by the Trustee; (3) interfering with the conduct of the emergency trusteeship; (4) refusing to provide a complete accounting of the financial condition of Local 918 and its funds to the Trustee, and refusing to provide all financial records and explanations for all receipts, disbursements, and financial transactions of any kind by Local 918; (5) destroying, removing, secreting, or altering any property of Local 918; and (6) litigating the action known as Local 918, et al. v. IBT, 97 Civ. 5708 (CPS) (E.D.N.Y.) or any other action or proceeding challenging or relating to the Trusteeship of Local 918 in any court or forum other than this Court.

FACTS

Pursuant to its authority under the Consent Decree the IRB conducted an investigation of Local 918. On September 16, 1997, upon completion of the investigation, the IRB issued the IRB Trusteeship Recommendation Concerning Local 918 ("IRB Report") to the IBT. The IRB Report charged that the Executive Board of Local 918 "has engaged in a pattern of conduct which violates the IBT Constitution and prevents the membership from obtaining information and exercising their rights." IRB Report, at 1. Specifically, the IRB found that: (1) the Executive Board of Local 918 failed to adopt and operate under Bylaws approved by its members and the international as required by the IBT Constitution; (2) the leadership failed to regularly hold membership meetings and, from July 1992 to the present, held only eight general membership meetings at which a quorum of 15 members were met; (3) the Executive Board entered into questionable and improper financial arrangements, and had granted themselves salary increases, bonuses, and benefits without first gaining authorization from the membership as well as failing to reimburse the Local for improperly received fees for attending Executive Board meetings; and (4) Local 918's officers negotiated sham collective bargaining agreements with employers who were permitted to be members of the Local. In conclusion, the IRB recommended the imposition of a Trusteeship over Local 918 and required General President Carey ("Carey") to report to the IRB any actions taken or planned within two weeks. (Letter from John J. Cronin, Jr. to Ron Carey of 9/16/97).

Although Defendants filed a complaint in the Eastern District of New York prior to Plaintiffs' commencement of this action, Defendants have not objected to the venue or this Court's jurisdiction over this matter. Accordingly, this Court finds that: (1) the Local 918 case falls within this Court's jurisdiction and venue properly lies in the Southern District of New York under both the Consent Decree and the All Writs Act; and (2) that litigation of the Local 918 case in any forum other than this Court would interfere with this Court's jurisdiction.

II. Issuance of Preliminary Injunction

"Ordinarily, a party seeking a preliminary injunction must meet the burden established by the now familiar test: (1) irreparable harm should injunctive relief not be granted; and (2) either likelihood of success on the merits or sufficiently serious factual questions making a fair ground for litigation with a balance of hardships tipping in the movant's favor." International Bhd. of Teamsters v. Local 810, 19 F.3d 786, 789 (2d Cir. 1994) (citations omitted). However, the Second Circuit has held that the "scope of the examination by the district court is limited" in the labor trusteeship context by the statutory scheme governing labor trusteeships. Id. at 789.

In the Local 810 case, the Court held that

once the parent organization demonstrates likelihood of success on the merits of its claim of right to impose the trusteeship and irreparable harm if it is not, then . . . the burden shifts to the local to show that the trusteeship was not imposed in accordance with the procedural requirements of the union constitution or that the parent organization acted without good faith or for a statutorily unauthorized purpose.

Local 810, 19 F.3d at 790-91. Furthermore, the Court noted that

where a parent labor organization's constitution allows imposition of temporary trusteeship in the case of an emergency, and the proper procedural requirements are met, a federal court may not invalidate that trusteeship, unless the local is able to show by clear and convincing evidence that the trusteeship was not established in good faith or was for a purpose not authorized by the Reporting and Disclosure Act. If the constitution provides for such a procedure, the statutory presumption of validity arises even where a temporary trusteeship is imposed prior to a union hearing.

Id. at 791. "Because the IBT sought to impose a Trusteeship on Local 918 without holding a prior union hearing, the IBT had the burden of demonstrating that the purpose for imposing the temporary trusteeship was authorized by the IBT Constitution, and that the trusteeship should be imposed without a prior union hearing." International Bhd. of Teamsters v. Local 745, 938 F. Supp. 1186, 1194 (S.D.N.Y.), aff'd, 109 F.3d 846 (2d Cir. 1996).

Local 810, 19 F.3d at 793. For the following reasons, this Court finds that Carey had a basis to believe in good faith that it was necessary to impose an emergency trusteeship on Local 918.

Carey received a report from the IRB that alleges on-going financial malpractice, undemocratic procedures, and improper collective bargaining agreements, and recommends the imposition of a trusteeship. First, the IRB Report states that the Executive Board of Local 918 failed to adopt and operate under Bylaws approved by its members and the international as required. The IRB Report found that" [Daniel] Lombardozzi [the president of Local 918] falsely represented that [the] Bylaws had been properly approved by the Executive Board and the Union membership." IRB Report at 12. Furthermore, the IRB Report stated that "the false representations by Local 918's President, Lombardozzi . . . establishes that the Local's officers are prepared to deceive the IBT concerning material facts relating to compliance with Constitutional and Model Bylaws provisions designed to protect members." Id.

Second, the IRB found that the officers of Local 918 failed to hold monthly membership meetings as required by the IBT Constitution. The IRB's investigation found that Local 918 met its "quorum requirement twice in 1995, four times in 1996, and not at all in 1997." Id. at 13. The IRB Report stated that "from July 1992 to the present, the Local has conducted only eight general membership meetings (out of a possible forty-five) at which a quorum was met." Id. The IRB Report indicated that "if the Local did not include its officers [in the count], it would have met a quorum at only three of these eight meetings." Id. Moreover, the IRB Report explained that at several of these eight meetings, matters beneficial to the Executive Board, such as officer nominations, Christmas bonuses, and wage increases were transacted. Id. at 13-14.

Third, the IRB Report indicated that the Executive Board's adoption and implementation of the Cost Sharing Agreement ("the Agreement") "raises questions under ERISA." Id. at 19. The IRB Report pointed out that "pursuant to Title 29, United States Code, Section 1108(c)(2), a full-time officer of a union who is a fiduciary of a benefit plan in which his members participate is prohibited from receiving compensation, other than reimbursed expenses, from such benefit plan." Id. at 19-20. Under the Agreement, the IRB found that the allocation of funds "disguises the payment of salary from the benefit funds to officers of the Local . . . who were also fiduciaries of the benefit plan." Id. at 20. Furthermore, the IRB Report charged that the "Agreement was never read or distributed to the membership at any time," and "it does not appear that the members ever approved the Agreement." Id. at 15.

Moreover, Local 918 apparently seeks to rewrite the IRB Rules to require the IRB to hold hearings prior to the issuance of a recommendation or limit the IRB's referral to the union to recommending charges without proposed sanctions. Def. Mem. at 21. These proposals are entirely irrelevant to the matters at issue in this proceeding. More importantly, Local 918 has no standing to raise any objections to the IRB Rules or to seek any modification of them.

The Rules for the IRB were approved by this Court and by the Second Circuit in proceedings in which the parties to the Consent Decree, the IBT and the United States, fully litigated the issues. United States v. IBT ("IRB Rules Opinion"), 803 F. Supp. 761 (S.D.N.Y. 1992), aff'd in part, rev'd in part, 998 F.2d 1101 (2d Cir. 1993). Local 918 is not a Party to the Consent Decree and thus has no standing to challenge or seek modifications of the IRB Rules. It is well established that the IBT adequately represents its members and its local unions in connection with Consent Decree litigation, and Defendants have offered no evidence that its interests were not adequately represented. United States v. IBT et al. (All Writs Order"), 728 F. Supp. 1032, 1050 (S.D.N.Y.), aff'd, 907 F.2d 277 (2d Cir. 1990) ("The International IBT represented what interests the subordinate may have had in the subject matter of the underlying litigation, and the embodiment of the settlement of that litigation -- the Consent Decree -- reflects such representation."); United States v. IBT et al. ("Friedman & Hughes"), 725 F. Supp. 162, 168, (S.D.N.Y. 1989) ("The International IBT, as the elective and administrative leadership of the IBT membership, litigated the suit and entered into the Consent Decree as the representative of its membership and considered the Consent Decree consonant with its members' interests."), aff'd, 905 F.2d 610, 622-23 (2d Cir. 1990); United States v. IBT ("Convention Opinion"), 764 F. Supp. 787, 791 (S.D.N.Y.) (denying motion to intervene by two groups of IBT members because they could not establish that their interests were not adequately represented by the IBT), aff'd, 940 F.2d 648 (2d Cir.) cert. denied, 112 S. Ct. 76 (1991).

CONCLUSION

As previously discussed, this Court finds that Carey acted in accordance with the procedural requirements set forth in the IBT Constitution for placing an IBT local in trusteeship, and this Court finds that Carey had a basis for believing in good faith that an emergency existed at Local 918 justifying the imposition of a trusteeship prior to a union hearing. Accordingly this Court finds no procedural impropriety that would support Local 918's resistance to IBT's imposition of the temporary trusteeship.

Furthermore, Defendants failed to show that "Carey acted contrary to the union's best interests, acted in his own self-interest, or that his actions were so outrageous or unconscionable that even if they were in the best interests of the union, they would constitute bad faith." Local 810, 19 F.3d at 794. Thus this Court finds that Local 918 has failed to rebut the presumption of validity of the IBT's imposition of an emergency trusteeship over Local 918 by clear and convincing evidence.

IT IS HEREBY ORDERED THAT Plaintiff IBT's motion for a preliminary injunction is GRANTED.

IT IS FURTHER ORDERED THAT Local Union 918 of the International Brotherhood of Teamsters and its officers, employees, agents, attorneys, or other representatives are enjoined from:

1. Refusing to deliver and return immediately all Local 918 property, moneys, funds, books, records and assets of any kind in their possession, custody or control, wherever situated, to Eugene P. Maney as Trustee of Local 918, or his designee;

2. Representing themselves as the authorized officers and/or representatives of Local 918, unless so authorized by the Trustee or his designee;

3. Interfering in any manner with the conduct of the emergency trusteeship by Eugene P. Maney or his designee;

4. Refusing to provide a complete accounting of the financial condition of Local 918 and its funds to Eugene P. Maney or his designee, and refusing to provide any and all financial records and explanations for all receipts, disbursements, and financial transactions of any kind by Local 918 or related to Local 918;

5. Destroying, removing, secreting, or altering any property, moneys or records, including but not limited to, the financial records of Local 918 or any financial records relating to Local 918; and

6. Litigating the action Local 918, et al. v. International Bhd. of Teamsters, et al., 97 Civ. 5708 (CPS) (E.D.N.Y.) or any other action or proceeding challenging or relating to the Trusteeship of Local 918 in any court or forum other than this Court.

IT IS FURTHER ORDERED THAT in accordance with Federal Rule of Civil Procedure 65(c), the IBT post security in the amount of $ 50,000.

Our website includes the main text of the court's opinion but does not include the
docket number, case citation or footnotes. Upon purchase, docket numbers and/or
citations allow you to research a case further or to use a case in a legal proceeding.
Footnotes (if any) include details of the court's decision.

Buy This Entire Record For
$7.95

Official citation and/or docket number and footnotes (if any) for this case available with purchase.